7 hacks to save more — without the mental struggle

January is when many of us swear we’re going to save more or pay down debt — especially after the holiday bills have landed.

By June, though, a lot of those New Year resolutions have likely unravelled. Coming up with a grandiose plan to slash your spending and channel cash to your savings account or credit card is relatively easy. It’s the sticking-to-it part that trips most people up.

A growing body of research suggests that’s at least in part because when we set financial goals we ignore the way our brain actually functions.

Here are a few psychological hacks that will help you stay on track:

You don’t need a budget. You need a spending limit and a buffer

Budgeting is one of the first things people do after they’ve vowed to get a handle on their finances. It’s also the first piece of advice many people hear when they seek professional help with their money.

But “there isn’t a lot of research suggesting that budgets will help you in the long term,” said Mariel Beasley at Common Cents Lab, a research lab at Duke University that studies financial decisions.

Budgets are easy to use for short-term goals, like Christmas shopping or a vacation. But as a financial tool for everyday living, they fall short, Beasley said.

In part, because human brains have “a very hard time conceptualizing extraordinary expenses,” she told Global News.

Sure, we can plan grocery spending, gas, bills, eating out and car payments. But there’s always something that catches us off guard.

There are wedding gifts, visits to the vet, and airfare to fly out for a funeral. These aren’t your typical emergency expenses — like a tree falling through your roof or a job loss — that warrant dipping into your rainy-day fund.

On the other hand, they aren’t part of our routine spending, either. And because of that, most of us fail to properly account for them, Beasley said.

WATCH: Here are the best and worst ways to consolidate debt

When we do try to forecast this sort of exceptional expenses, we usually add categories to our budget like “wedding gifts” or “traffic tickets.” Then, invariably, the next month what busts our spending limit is a visit to the vet.

The solution? Create a generic and generous buffer in your budget for stuff you can’t predict, said Beasley.

In fact, you may want to take your budget-streamlining one step further. In her popular book Worry-Free Money, Toronto-based financial advisor Shannon Lee Simmons suggests simply working with what she calls a “hard limit” on spending. That’s what you get after you’ve set money aside for fixed expenses (bills, rent, debt payments), meaningful savings (retirement, home down payment) and short-term savings for things like emergencies.

But the science backs up that intuition. Cognitive psychology shows that one of the easiest ways to boost savings is to switch to automated deposits.

Every time we manually move funds into our savings account, for example, we are resisting the temptation to spend that money right now or to give in to our natural inertia. Automating what you can spares you a lot of the mental struggle.

In addition to setting up regular transfers from your chequing to your savings account, there are also several apps that can help you squirrel away a few more dollars every month.

WATCH: These apps can help you save more without even noticing it

Pay with debit for almost anything

Another way to keep things simple for your brain is to use a debit card for your discretionary spending, which is everything you want to spend money on, Beasley said.

With a debit card, you know that your bank account will drop at every swipe. And that means “you feel the pain of paying in the moment,” Beasley told Global News.

With credit, by contrast, you postpone that mental pain until your credit card bill lands, which makes it easier to overspend.

WATCH: Got credit card debt? Making only minimum payments is a slippery slope

For the sake of your credit score, use your credit card to pay bills

Still, many of us can’t afford to cut credit cards out of our lives. It’s hard to build a credit history without a Visa or a MasterCard in your wallet.

To get around that problem, Beasley suggested using a credit card only for fixed expenses like your phone, cable and gas. That way, you can pay off your credit card bill every month as if it was a bill.

WATCH:Understanding your credit score.

Break your big goals into bite-sized chunks

Human beings notoriously have a hard time getting started on big goals like paying down a mountain of debt or saving for a down payment on a new home.

An easier way to approach this is to cut down those big goals into bite-sized chunks, said Beasley.

For example, many financial advisers recommend having six months worth of living expenses tucked away in a rainy-day fund. But saving up that much money can look like a daunting task if all you can squirrel away every month is 10 per cent of your income.

“You won’t feel like you’re making any progress for a long time,” Beasley said.

The trick is to set yourself intermediary targets. For example, at first you might want to focus on setting aside one month worth of living expenses. When you reach that goal, you should allow yourself to have a little celebration.

One thing to note, though, is that things seem to work a little differently when it comes to paying down multiple debts.

Many financial advisors and debt counsellors swear by the so-called snowball method of tackling debt, which preaches paying off your smallest debt first. The idea is you get an easy win that will then help you build to psychological momentum to attack your bigger liabilities.

But Beasley said that while the research shows that most people like to pay off small debts, this doesn’t necessarily translate into further momentum. Taking a small debt off your mind may even give you “a false sense of completion,” she added.

A better strategy may be to focus on the debt with the highest interest rate, and, if it is a large one, set yourself intermediary goals to pay it off, Beasley said.

WATCH: Should you prioritize saving into your RRSPs or paying down the mortgage?

Pick a positive goal

Speaking of goals, Lee Simmons recommended turning every financial goal into something you want to achieve rather than something you must achieve or else.

A feeling of panic when you look at your holiday credit card bill can be a powerful motivator to start paying off debt. But you won’t last long, if that’s all that drives you.

“Fear-based motivation packs less of a punch over time,” Lee Simmons said.